The Rural Voice, 1991-01, Page 22TOOLS & EQUIPMENT
Farm • Home • Contractor
Ryder Truck Rentals
Local or One Way
519-357-1666
or 519-357-2335 (after hours)
Hwy. 4 N., WINGHAM
NEW — REVISED & LARGER
— 3rd EDITION
The London Huron & Bruce
Railway 1870-1990
This nostalgic book is available from
Harry A. Thompson
R.R. 2 Clinton NOM ILO
or from the author
Calvin Patrick
204-157 Green Ave. W.
Penticton B.C. V2A 3S9
— $16.50 p.p.—
FULL COVERAGE
PROTECTION
for
FARM • HOME • AUTO
We specialize
in Farm
Insurance.
Call your agent
today. We will
be happy to
discuss your
insurance
needs.
AGENTS
Graeme Craig 887-9381
Robert McNaughton 527-1571
Don Taylor 482-9976
Banter & McEwan 524-8376
John Wise 482-3401
Est. 1876
McKILLOP
MUTUAL
INSURANCE
COMPANY
Seaforth
527-0400
18 THE RURAL VOICE
GET THE MOST OUT OF THE GST
The Goods and Services Tax
(GST) is slated to come into effect
on the first day of January 1991.
While farmers fare better under the
GST than many other businesses, to
obtain the maximum advantage,
farmers must understand how the
tax operates and how to obtain tax
credits.
The GST, which replaces the old
and out -dated federal manufacturer's
sales tax system, will apply on
supplies received from a person
engaged in a commercial activity. The
definition of a person is very broad
and includes individuals and corpor-
ations. Commercial activity generally
means a person who is carrying on a
business or engaged in an adventure or
concern in the nature of trade.
For most farmers, tax will be paid
out on items purchased for the main-
tenance and operation of the farm.
Upon the sale of certain products, tax
will be collected. If the farmer pays
out more than than he collects, he will
be entitled to a rebate.
Although a person is not required
to collect GST on sales if their gross
sales do not exceed $30,000 annually,
such a person will not be able to claim
the tax paid out for purchasing the
items used in the operation of his
business (input tax credits — ITCs).
Thus, even farmers under the "small
trader's threshold" may find it more
advantageous to register under the
GST and try to collect GST on taxable
sales and then take advantage of any
rebates.
Under the GST system, the
agricultural sector receives special
treatment. Most sales by farmers will
be zero-rated; that is, no tax will be
collected by the farmer on the sale of
specific items. The farm can still
claim ITCs on purchases made for the
purpose of engaging in a commercial
activity. Sales of agricultural pro-
ducts, farm livestock, fresh caught
fish, and other seafood will be zero-
rated. Taxable sales will include cut
flowers, foliage, bedding plants, soil
and soil additives, seeds and natural
fertilizer (unless it is sold in bulk),
bait, processed wool, horses, wood,
fur, and hides.
Examples of purchases made by
farmers which will be zero-rated
include combines and large tractors.
These large capital expenditures have
been zero-rated to reduce cash flow
problems farmers may experience
when purchasing these items. Also,
farmers may file more than once a
year to alleviate hardships caused by
paying tax on certain items and
services.
Another zero-rated item is rental
income pursuant to a sharecropping
agreement. To qualify, both parties
must be registered under the system.
The GST will have limited effect
on sales of real property by farmers.
Sales of farmland will not be taxed if
the land is sold as part of the sale of a
going concern. If part of the farm is
sold to a developer, tax will be paid on
the purchase by the developer. Inter-
family transfers of farmland will not
be taxed.
In order to claim input tax credits,
there are various documentation
requirements. For purchases under
$30, the following documentation is
required:
1) vendor's name or trading name
2) identification of when the GST was
paid or payable (receipt date)
3) total consideration paid
For purchases from $30 to $150, in
addition to the above, the following is
required:
1) the total amount of GST charged,